Euro rises in longest streak in 1 year on outlook

“The ECB has preserved price stability and the necessary conditions for sustainable growth, fought redenomination risks and the fragmentation of financial markets,” he said today in Rome. “Time has been gained for other actors to contribute their part in crucial policy domains that do not belong to the competence of ECB as defined by its mandate.”

Italian industrial output increased 0.5% in October from the previous month, the national statistics office said. Economists surveyed by Bloomberg forecast a gain of 0.2%. Italy’s economy was stagnant in the third quarter, the first time it hasn’t contracted since the three months through June 2011, a separate report showed.

“The market was positioned for a weaker euro in expectation of negative rates and what has changed is that we saw a strong implication that this is not necessarily going to be the case,” said Neil Jones, head of European hedge-fund sales at Mizuho Bank Ltd. in London. “There’s been a buying back of the euro by global investors. Meanwhile, you’ve got euro-zone economic data looking OK as well.”

Market Results

The euro has gained 8.1% this year, the best performer of 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar rose 3.1%, while the yen tumbled 14.6%.

The dollar weakened against the year after reaching a six- month high after Federal Reserve Bank of Dallas President Richard Fisher said in Chicago yesterday the central bank should begin reducing stimulus because the economy has “enough firepower already if it is properly used.”

“We should get started as soon as possible,” he told reporters, referring to when the Fed should start trimming the pace of its bond purchases from the current $85 billion a month.

The central bank will begin tapering at its Dec. 17-18 meeting, according to 34% of economists surveyed by Bloomberg on Dec. 6, an increase from 17% on Nov. 8.